The U.S. Commodity Futures Trading Commission and Britain’s Financial Conduct Authority are fining R.P. Martin over $2 million for misconduct related to manipulating the London Interbank Offered Rate (Libor). The brokerage firm will pay $1.2M to the CFTC and approximately $1M to the British regulator. The latter said the fine could have been bigger but the financial unit showed that it couldn’t afford to pay more.
Libor helps determine what the borrowing costs are for trillions of dollars in credit cards, loans, and mortgages. According to regulators, the British broker-dealer helped a UBS (UBS) trader manipulate Libor as it was tied to the yen. RP Martin is accused of making misleading recommendations to its own employees. The latter issued the submissions used to establish Libor.
In return for RP Martin’s help, its brokers are said to have accepted over $400,000 in payments through wash trades that were actually just to give commissions to the brokerage firm. RP Martin’s brokers are also accused of turning in cash bids that weren’t real so that this would affect the yen Libor while benefitting the trader from UBS.
Aside from paying the two regulators, RP Martin has consented to enhance internal controls for establishing benchmark interest rates. Meantime, two of its brokers, James A. Gilmour and Terry J. Farr, are facing content with criminal charges over Libor manipulation. They allegedly conspired with employees at different banks, including ex-UBS and Citigroup (C) trader Tom A. W. Hayes, who is facing criminal charges in the U.S.
A number of firms have had to pay huge fines, sometimes in the billions of dollars, to resolve civil allegations related to Libor manipulation. These include UBS, Royal Bank of Scotland (RBS), Barclays (BCS), Citigroup, and JP Morgan (JPM).
RP Martin Fined $2.2 Million in Libor Rigging, NY Times, May 15, 2014